Performance Evaluation Report: AES Kelanitissa Power Project in Sri Lanka

The AES Kelanitissa Power Project aimed to ease a critical shortfall in Sri Lanka's power supply and to minimize the cost of load-shedding by helping to balance the country's supply dependence on hydropower. Other project goals included expanding consumer access to reliable and affordable power to at least 80% of the population by 2005, and improving governance in the power sector through private participation.

The project, supported by the Asian Development Bank (ADB), constructed and operated a 163-megawatt auto diesel-fired combined cycle gas turbine power plant at the site of an existing plant on the lower reaches of the Kelani River.

The project was financed by a $26 million ADB direct loan, approved in 2000, and a $52 million partial risk guarantee. AES Kelanitissa Limited, the project borrower, is a joint venture between AES Corporation, an independent power producer based in the United States, and Hayleys Limited, a Sri Lankan conglomerate established under a build-own-operate-transfer arrangement with the Government of Sri Lanka. Under that arrangement, the plant would be transferred to the government at the end of a 20-year concession period.

The project overall is rated less than successful, although its performance evaluation report noted a number of positive outcomes, including its role as a major catalyst in stabilizing Sri Lanka's supply shortage within a short period - a remarkable achievement. The overall rating was based on evaluative findings for the criteria of private sector development; business success; economic development; and environmental, social, health, and safety performance.

The evaluation report says ADB should consider alternative fuels - such as renewable energy, thermal fuels, and clean coal - when appraising the cost and benefits of oil-fired generation plants.

 

 
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